Ten years ago, the reason for Bitcoin’s existence is to prevent economies from affecting a currency. It was a reaction from the 2008 financial crisis. Ten years later, we now have a great number of other cryptocurrencies. In fact, who would’ve thought that countries would even think of blockchain as a solution to their economic concerns? Venezuela designed its own cryptocurrency because of hyperinflation experienced by the country’s economy.
In fact, many are already leaving the country hoping to find greener pastures in different parts of Latin America. Thousands of people are reportedly leaving the country daily.
How Much is Petro Really Worth?
Petro is supposedly backed by oil. When Petro was first announced, it was designed to fight economic sanctions against Venezuela. In addition to this, the current administration also pegged the cryptocurrency to their new fiat currency—the sovereign Bolivar.
However, the value of the Petro is quite unclear today. In November, Venezuela’s central bank announced that a unit of Petro was then equivalent to around 9,000 sovereign bolivars. Now, here’s when it gets tricky. It means that a US dollar is equal to 638.18 sovereign bolivars. Supposing that one oil barrel backs one Petro, it means that one oil barrel is worth $14.10. However, if you will look at the exchange rate at the Banco de Venezuela which is a commercial bank that was acquired by the government, one Petro is supposedly worth 38,200 sovereign bolivars or approximately $59.85.
Outside Venezuela, oil prices have fluctuated recently in the last six months it went from $77 high to $45 in its lowest. And It is also important to note that Bloomberg’s Café Con Leche Index also shows a different number when it comes to the sovereign bolivar’s value and puts it at 900:1 against the dollar.
Push towards Adoption?
There have already been questions regarding the existence of the oil reserves that are supposedly backing the cryptocurrency. It has also been noted that the white paper was a copy of Dash. But despite these controversies surrounding the Petro, Maduro’s administration is still pushing towards adoption. Banks were already ordered to accept the cryptocurrency.
For Venezuelan economist Jose Hardy, “Bitcoin is turning 10 years old. Its price fell by 30% in one month, 50% in 6 months and 80% in one year. If that happens with Bitcoin, are we going to believe the story of the explosive rise of the Petro?”.
There has been an increase in the number of businesses and Venezuelans who are turning into cryptocurrencies today. But instead of turning to Petro, they are turning to other reputable digital assets such as Bitcoin and Dash.
There are individuals in Venezuela that have been reported to be mining Bitcoin taking advantage of the low electricity fee in the country. In addition to this, businesses started accepting Dash payments from its customers. KFC in Venezuela has been reportedly accepting Dash as payment.
Could it be possible for Venezuela’s economy to recover with Petro? Is there really oil that backs Petro? Considering all these questions, it seems that the country’s economic problem under Maduro is still far from over.